Day of Reckoning is Coming for Tax Relief

Halloween is coming four days early for the tax debt relief industry-and the result will not be a treat for firms who make false promises to distressed taxpayers, according to independent Web site easyIRS.com.

On Oct. 27, debt resolution companies covered under new Federal Trade Commission (FTC) legislation won’t be allowed to collect advance fees-a nightmare for many “pennies on the dollar” tax firms that rely on upfront money to stay afloat.

In fact, under the new rule, firms will not be allowed to collect a penny until they’ve successfully negotiated a reduction in the customer’s tax debt, and until the customer has made at least one payment toward the settlement.

The FTC has also ruled that tax debt relief firms have a special duty to back up any claims in their advertising. For example, a company that makes attention grabbing claims of huge savings would be required to disclose the probability of success, how much services cost, and how long people will have to wait to see results.

The FTC ruling (case number 3:2010cv02063) in the California Southern District Court reinforced its hard-line position Oct. 6 by shutting down American Tax Relief, alleging deceptive practices and false claims. In a separate matter, Roni Deutch, a California-based tax debt firm, is facing a $34 million lawsuit (case number 2010-00085933) filed by state Attorney General Jerry Brown in Sacramento County Superior Court.

The state is claiming that Deutch advertises a success rate for IRS settlements of up to 99%, yet successfully reduces the amount of money her clients owe in taxes in just 10% of cases.

With the start of FTC enforcement, some tax resolution firms are shaking in their boots.

“Many of (the legislation’s) conditions would significantly impair our practices. Some members have indicated that under this rule, they might actually abandon tax problem resolution work altogether,” said Lawrence Lawler, national director of the American Society of Tax Problem Solvers (ASTPS), in the society newsletter.

But the solution is simple: comply with the FTC, wrote Michael Mallow and Michael Thurman in an article for law firm Loeb & Loeb LLP, which represents companies affected by FTC actions. They wrote that the debt relief industry should accept the regulations and collect fees after clients’ debts are settled-and that the firms might benefit in the end.

Jim Buttonow, a 19-year IRS veteran and co-founder of tax software company easyIRS.com, who audited the credit and debt relief industry as an IRS official, said the problem is in the business model.

The upfront cost of acquiring a customer with tax debt is extremely high. For example, TaxMasters, Inc., a tax debt relief firm that advertises heavily on radio, TV and the Web, disclosed in its recent Securities and Exchange Commission filings that it spends roughly 40% of its revenue in advertising and promotion to acquire customers. These costs necessitate collecting large upfront payments from clients. To convince cash-strapped prospects to commit to the large fees, tax debt firms often must exaggerate the money savings that a customer might receive from an IRS settlement, Buttonow said.

Because of the legislation, Buttonow said customers will more likely work directly with the IRS, without professional representation, or work with local tax practitioners.

“Most problems just require that you understand your facts, the applicable law, and know how to navigate the IRS,” Buttonow said. “The best way to solve any IRS problem is to do it yourself or ask a trusted tax professional if your problem is serious. The FTC reiterated this position in their recent consumer alert.” – Source

I can always use your help. If you have a tip or information you want to share, you can get it to me confidentially if you click here.

You either have an agenda or you don’t do your research. If you would have just read the comments from your previous posts about tax relief and TSR you would have realized you are wrong. Now the FTC has confirmed you are wrong: http://ftc.gov/opa/2010/10/deb…

http://profiles.yahoo.com/u/WKUO7JK3IU33HDROJKKWIRBWKU Mike C

Dear Getoutofdebtguy,

You either have an agenda or you don’t do your research. If you would have just read the comments from your previous posts about tax relief and TSR you would have realized you are wrong. Now the FTC has confirmed you are wrong: http://ftc.gov/opa/2010/10/debtrelief2.shtm

http://GetOutOfDebt.org Steve Rhode

This was posted after the time the FTC included tax relief in the TSR and prior to their position they released yesterday. It’s a fast moving issue.

This post was a press release issued by easyirs.com.

Damon Day

Hey Captain,

You are correct that the credit card companies also do things to victimize consumers. However since I early quoted a saying from my father, let me add something my mother was fond of saying “two wrongs don’t make a right”

Debt Settlement companies are very fond of saying that there are a few bad apples. I would say there are a few good apples. Are you arguing that since the credit card companies are doing more harm then I should not expose the settlement companies that are also harming consumers on the other end of the equation?

I will leave it up to my clients to determine whether or not I “know nothing” about what these companies are doing. I would appreciate if you would give me an example of a blog post on my website where I talk about a company I know nothing about. If I am wrong about something I would very much like to correct it, so please let me know where I have made a mistake.

I look forward to your feedback.

http://DamonDay.com Damon Day

Hey Captain,

You are correct that the credit card companies also do things to victimize consumers. However since I early quoted a saying from my father, let me add something my mother was fond of saying “two wrongs don’t make a right”

Debt Settlement companies are very fond of saying that there are a few bad apples. I would say there are a few good apples. Are you arguing that since the credit card companies are doing more harm then I should not expose the settlement companies that are also harming consumers on the other end of the equation?

I will leave it up to my clients to determine whether or not I “know nothing” about what these companies are doing. I would appreciate if you would give me an example of a blog post on my website where I talk about a company I know nothing about. If I am wrong about something I would very much like to correct it, so please let me know where I have made a mistake.

I look forward to your feedback.

Captain

Mabey your issues should be with the credit card companies themselves then with a company that has the intention of trying to help the consumer-granted there are bad apples in the industry, as there are in any industry- but it seems like the credit card companies are doing alot more harm to people then these debt settleemtn companies are, yet sites like these are always putting down any company that has to do with debt settlement, and in your case before you even knew anything about the company….sounds to me like someone may have pee’d in your Wheaties Mr. Damon…best of luck to you and your blogs putting down companies you know nothing about….on a site that has debt settlement companies ad’s on it. Thats like a anti smoking website with stories about all the hazards of smoking and how bad the tobacco companies are, with Marlboro and Camel ad’s all over it…would you take that site serious as a person trying to quit smoking? Didnt think so

Damon Day

Hey Captain,

I appreciate your thoughts on my style. I think it is just fine. Helping consumers avoid getting ripped off is not my hobby. It is what I do for a living. So perhaps you can understand why I get so excited to see debt settlement companies that have made millions by ripping off consumers for years, get what has been coming to them.

I certainly can’t please everyone, nor do I intend to. My focus is to bring consumer attention to the fatal flaws in the industry. If my style stirs up some controversy then that just helps my message reach more consumers and make them aware that a majority of the debt relief industry does not operate for the benefit of the consumer.

You are correct that I was wrong to say he, when I should have said she. Thanks for bringing the error to my attention, I didn’t proof read my comment before I sent it.

http://DamonDay.com Damon Day

Hey Captain,

I appreciate your thoughts on my style. I think it is just fine. Helping consumers avoid getting ripped off is not my hobby. It is what I do for a living. So perhaps you can understand why I get so excited to see debt settlement companies that have made millions by ripping off consumers for years, get what has been coming to them.

I certainly can’t please everyone, nor do I intend to. My focus is to bring consumer attention to the fatal flaws in the industry. If my style stirs up some controversy then that just helps my message reach more consumers and make them aware that a majority of the debt relief industry does not operate for the benefit of the consumer.

You are correct that I was wrong to say he, when I should have said she. Thanks for bringing the error to my attention, I didn’t proof read my comment before I sent it.

Captain

Mabey your issues should be with the credit card companies themselves then with a company that has the intention of trying to help the consumer-granted there are bad apples in the industry, as there are in any industry- but it seems like the credit card companies are doing alot more harm to people then these debt settleemtn companies are, yet sites like these are always putting down any company that has to do with debt settlement, and in your case before you even knew anything about the company….sounds to me like someone may have pee’d in your Wheaties Mr. Damon…best of luck to you and your blogs putting down companies you know nothing about….on a site that has debt settlement companies ad’s on it. Thats like a anti smoking website with stories about all the hazards of smoking and how bad the tobacco companies are, with Marlboro and Camel ad’s all over it…would you take that site serious as a person trying to quit smoking? Didnt think so

Captain

Wow Damon…Pee’d in his Wheaties? ‘Smell of sweet vindication worth getting up for’?….Mabey its time to pick up a new hobby buddy, your comments are ridiculous…btw, the Roni Deuth your bashing is a female, not a man, do some research or at least look at their website before you go talking crap about the company…Im not even in the tax space so this company doesnt matter to be, but your comments look like they were posted by a sarcastic 16 yr old, u should really work on that

http://DamonDay.com Damon Day

This really sucks for a lot of debt settlement scammers that had aspirations of migrating into selling tax negotiation. :-( You can’t see me but I am slowly rubbing my index finger and thumb together to play my own rendition of “my heart bleeds for them” on the worlds smallest violin.

I am not sure what that actually means, but my father said it to me a lot growing up and it seemed fitting.

Talk about bad luck, Roni Deutch must feel like the FTC just peed in his Wheaties. He is getting nailed in this lawsuit, and he just jumped into debt settlement right before the FTC slapped the industry and now the same legislation is going to hit him with his tax relief crap.

Oh, how sometimes the sweet smell of vindication in the morning air is worth getting up for. :-) Another point for consumers.

Captain

Wow Damon…Pee’d in his Wheaties? ‘Smell of sweet vindication worth getting up for’?….Mabey its time to pick up a new hobby buddy, your comments are ridiculous…btw, the Roni Deuth your bashing is a female, not a man, do some research or at least look at their website before you go talking crap about the company…Im not even in the tax space so this company doesnt matter to be, but your comments look like they were posted by a sarcastic 16 yr old, u should really work on that

Damon Day

This really sucks for a lot of debt settlement scammers that had aspirations of migrating into selling tax negotiation. :-( You can’t see me but I am slowly rubbing my index finger and thumb together to play my own rendition of “my heart bleeds for them” on the worlds smallest violin.

I am not sure what that actually means, but my father said it to me a lot growing up and it seemed fitting.

Talk about bad luck, Roni Deutch must feel like the FTC just peed in his Wheaties. He is getting nailed in this lawsuit, and he just jumped into debt settlement right before the FTC slapped the industry and now the same legislation is going to hit him with his tax relief crap.

Oh, how sometimes the sweet smell of vindication in the morning air is worth getting up for. :-) Another point for consumers.

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